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Hodlers Suppress BTC Liquidity – Long-Term Holders Own ¾ of Bitcoin in Circulation, Move it off Exchanges

Last Updated November 24, 2023 11:52 AM
James Morales
Last Updated November 24, 2023 11:52 AM

Key Takeaways

  • Long-term holders control more of the total Bitcoin supply than at any point in the past decade.
  • Coins that have remained in the same wallet for 5 months or more now make up over 76.2% of all BTC.
  • The amount of Bitcoin not held on exchanges reached an all-time high.

While not the only factor in play, the basic law of supply and demand means low liquidity levels have certainly contributed to Bitcoin’s recent gains. 

What’s more, an analysis of Bitcoin wallets suggests a significant number of investors are prepared for HODL, and a fresh injection of liquidity might not happen any time soon.

Long-Term BTC-Holding At All-Time High

On Thursday, November 23, the number of coins that have remained in the same wallet for at least 5 months rose to an all-time high (ATH) of 14.93M BTC, representing 76.3% of the total supply. Ignoring data from Bitcoin’s first year, the ratio of long-term to short-term BTC holders is now higher than ever, beating a record that had held since 2015. 

long term BTC holders
  76.3% of all BTC has been in the same wallet for 5 months or longer.

Chainalysis data shows that nearly 13.2M BTC has remained in the same wallet for 52 weeks or more, a 3.8% increase in the last 180 days. During the same period, there was an 8.1% reduction in the amount of Bitcoin held for 2 weeks or less.

With more investors than ever choosing to HODL, they have increasingly opted not to keep their BTC on crypto exchanges. According to Glassnode , the total supply of Bitcoin not held on exchanges reached an ATH of 15.4M BTC last week.

Rising Interest In Self-Custody

With long-term holders making up a larger portion of Bitcoin investors, many have chosen to move their assets off exchanges to hardware wallets or other self-custody solutions.

While inconvenient for traders or anyone intending to sell their Bitcoin in the near future, self-custody is ideal for investors who plan to sit on their assets over a period of years.

After all, even though many crypto exchanges have adapted their custody arrangements post-FTX to reassure users that their funds are safe, many investors remain suspicious of handing responsibility for safeguarding their assets to centralized platforms. For long-term Bitcoin holders, the crypto mantra, “not your keys, not your coins,” is especially pertinent.

Many long-term investors prefer self-custody for security and privacy reasons, as numerous wallets allow for anonymous use. Senator Elizabeth Warren, however, has proposed a crackdown on ‘non-custodial wallets,’ which lack identifiable owners.

Co-sponsored by Senator Roger Marshall, the Digital Asset Anti-Money Laundering Act, would introduce new rules that limit how banks and other financial institutions can interact self-custody crypto wallets.

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